Author Question: What is the relationship shown by the circular flow among income, total expenditure, and GDP? ... (Read 91 times)

LaDunn · **on:** Jun 29, 2018

What is the relationship shown by the circular flow among income, total expenditure, and GDP?

What will be an ideal response?

Question 2

During a recession, the average duration of unemployment tends to

A) be unpredictable.
B) be about the same as during an expansion.
C) decrease.
D) increase.
E) remain constant.

trog · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

They are all equal. The value of production, which is GDP, equals income because firms pay factors (income) the revenue they receive from selling the goods and services they produce (GDP). Next, the revenue that firms receive from selling the goods and services they produce (GDP) is equal to what is spent as expenditures on the goods and services. (total expenditure).

Answer to Question 2

D